Shaping institutions —of, by and for the people
People orientation is at the core of business institutions just as it is in democracies. Such firms contribute to society and communities, and, incidentally, also make profits
During the American Civil War in the 1860s, US President Abraham Lincoln delivered a brief, albeit historic speech. He invoked “a government of the people, by the people, for the people” in his famous Gettysburg address, and etched indelibly the core element of any institution—people.
Our joint research and authorship of books on ‘Building Institutions’ by corporate shapers point to the same unfaltering truth: People-orientation is at the core of business institutions just as it is in democratic nations. Companies of, by and for the people make for institutions. Shapers are known, inter alia, for exceptionally high people-orientation, thus contributing to society and communities, and, incidentally, also making profits.
Take the case of TCS. When there were less than 10 database experts in Mumbai, TCS pioneered the creation of skilled human resources to seed a new industry for India. F C Kohli, the father of Indian IT, worked closely with Dr P K Kelkar, who oversaw the development of IITs, to develop the first M.Tech program in computer science at IIT Kanpur. Kohli attracted talent from MIT, UCLA and Harvard.
When S Ramadorai took over, the Indian IT industry was growing at a scorching 40% per year and the human resource challenge had acquired a different dimension altogether. Ram (as he is known) and his team initiated ‘Ignite’—a programme to train non-engineering graduates to become business consultants who could travel the world and speak the one language of TCS. The company has managed to increase its employee strength 40 times over 23 years, from 10,000 employees in 1996 to 4,17,000 in 2019, with the lowest attrition rate in the industry.
Building an organisation through hiring the right people with the desired work ethic and values by catching them young, and allowing them to explore their potential has been the formula for success for the behemoth of India’s financial sector, the HDFC group. As Deepak Parekh, the shaper of the HDFC group, said in his interview for one book in the series, “We always say that we hire ordinary people and make them do extraordinary things.” What better way than this to epitomise Abe Lincoln’s ‘of the people’? Marico’s shaper, Harsh Mariwala, saw early on that an organisation could command human qualities like creativity, passion and initiative.
What is necessary is to ensure that an institution is built ‘by the people’ with these qualities, who can ensure a work culture where people are encouraged to take risks without punishing failure. It also means empowerment of a certain nature that had not been imagined hitherto. Thus, Marico entrusts employees with keeping their own attendance and leave records, with the HR department neither monitoring employees’ attendance nor maintaining leave records; reimbursements for expenses incurred at work are also self-administered, thus doing away with routine bureaucracy.
Such empowerment and encouragement for an entrepreneurial orientation is characteristic of other business institutions like Kotak Mahindra Bank (KMB) as well. However, to let the organisation be built by people, the shaper has to be one who revels in a team comprising achievers who can question, challenge and express dissent. Uday Kotak’s team at KMB has people like Shanti Ekambaram, who was a tough competitor in his early days.
As Uday says, “If your team members are better than you, that’s what you want.” Anil Naik of L&T is equally open to feedback from his employees and has been known to ask them a simple, direct question: “What do you think we need to transform this company?” While profits are the oxygen of business organisations, business institutions exist primarily ‘for the people’. Biocon is one such institution, with its shaper unsurprisingly epitomising a business with courage and heart.
Kiran Mazumdar-Shaw believes she was following her heart by manufacturing and supplying insulin to the poor in the US. It was her courage that made her take on the big players in the US by profitably selling her insulin brand at a fraction of the price that other big drug pharma companies were charging; 90% of the poor and immigrant population use Biocon’s insulin, which costs $5 per unit compared to the price of $200-$250 per unit of the other large drug manufacturing companies.
Keen business sense apart, almost all shapers and their business institutions have been associated with giving back to society. L&T’s Naik remains deeply committed to the community and has pledged 75% of his wealth to social causes. Marico gives back to society through mentoring and facilitating entrepreneurs to scale their ventures through the Marico Innovation Foundation, while the Kotak Education Foundation, along with support towards a badminton academy managed by Pulella Gopichand, are KMB’s ways of corporate social responsibility.
Thus, business institutions are known for the people they create and in turn get created by them.
(During his 50-year career, the author had served as Director, Tata Sons and, before that, as Vice Chairman, Hindustan Unilever. Tulsi Jayakumar is Professor of Economics and Chairperson, Family Managed Business at Bhavans SPJIMR, Mumbai. Together, they have authored the books ‘How TCS built an industry for India” and ‘How Uday Kotak built a valuable Indian bank’)
Author, Corporate Advisor and Distinguished Professor at IIT Kharagpur
Professor, Bhavans SPJIMR, Mumbai